The company added that shareholders need not attend the extraordinary general meeting scheduled for April 15 as well.

In a filing with the Singapore Exchange, Hyflux said it "has no confidence that the investor is prepared to continue to complete the proposed SMI investment, even if all outstanding conditions precedent under the restructuring agreement" are fulfilled.

It said SMI has “repudiated the restructuring agreement” and that it has accepted SMI’s repudiation.

“The restructuring agreement is therefore terminated and Hyflux intends to take all necessary action in connection with such termination,” said Hyflux.

In response, SMI said Thursday it was “surprised by the action taken by Hyflux".

It said in a statement: “SMI has been waiting for Hyflux to disclose further material information following multiple requests for such disclosure. The delay in disclosing this material information has prevented SMI from determining a workable allocation between working capital and the settlement amount to creditors under the restructuring agreement.”

The rescue plan has been looking shaky since last Thursday, when SMI said it may have grounds to walk away because Hyflux withheld key information on the group’s financial state, resulting in SMI underestimating how much it would take to rescue the firm.

This “new material information” that came to light significantly increases Hyflux’s working capital requirements, which in turn could “affect the amount available for settlement to creditors”, SMI said earlier. It also said it had not agreed to the current allocation.

But Hyflux maintained that SMI had agreed to the allocation of the $271 million to settle debts with creditors before publication of the restructuring scheme on Feb 16.

In its Thursday statement, SMI reiterated thart it had already issued Hyflux two notices to remedy threats to the Tuaspring plant and the Magtaa desalination plant in Algeria on March 18 and March 25 respectively. These threats have not been remedied, it said.

SMI also said it was informed of a threat to a third major project only "yesterday". When asked, SMI declined to reveal the identity of the third project.

It maintained it has at all times abided by the restructuring agreement, and is taking legal advice in relation to the action taken by Hyflux.

Hyflux in its Thursday's announcement sought to reassure stakeholders, saying it will "continue to relentlessly pursue all other viable strategic opportunities" as part of the court-supervised restructuring.

"The company intends to work closely with the key creditor groups and relevant stakeholders to find mutually acceptable bases to enable the company to pursue such alternative opportunities," Hyflux said.

It held out the hope that recent actions by national water agency PUB could result it a wider pool of alternative potential white knights.

Hyflux on Thursday said this "could potentially enable the company to reach out to a wider pool of investors which may not otherwise have been interested in an investment in the group had this asset remained within the group and for which PUB's approval for a change in control of such asset will be required."

Hyflux said it will "continue liaising with the PUB on this aspect."

Hyflux preference shares investor LH Tay, who invested $100,000 in the instruments, told The Straits Times he is “not surprised" at the latest twist in the Hyflux saga as this was one possible outcome he was prepared for.

Said Mr Tay: “There are too many regulators involved, which means there will be higher chances of SMI walking off the deal. It will get even more messy and there will be more delays in projects, and the claims will be higher, and the chances of Hyflux’s survival even slimmer.

Calling it an unexpected development, Securities Investors Association (Singapore) chief David Gerald told The Straits Times he has reached out to Hyflux founder Olivia Lum over whether there is an alternative solution that can be presented to the investors and creditors.

“According to her, the board will quickly re-engage with previous interested parties who had shown keen interest and were bidding for Hyflux with SMI," said Mr Gerald. "She said that the board needs some time to negotiate with interested parties and has asked that they be given some time and space to work on an alternative proposal to avoid liquidation.”

He added that Sias has called on the senior creditors to give the company a chance to provide an alternative proposal and not put the company under liquidation hastily, in which case the retail investors - some 34,000 perpetual and preference shareholders - will lose everything.

“I have, on behalf of the retail investors, conveyed to her the dissatisfaction with the last offer for them and had requested to bear that in mind when discussing a new deal.

“In the circumstance, Sias calls on all stakeholders to allow Hyflux time and space to work out an alternate solution and support the board to provide the solution,” said Mr Gerald.

The Straits Times

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